Tourism hotspots await hotel investors

Tourism hotspots await hotel investors

An aerial view of Karon beach in Phuket, a prime area for investment.
An aerial view of Karon beach in Phuket, a prime area for investment.

The massive blow to the tourism industry caused by the outbreak may offer an opportunity for hotel investors waiting for property sales, but operators in Chiang Mai and Phuket have yet to witness that phenomenon.

"Over the past 10 years, hotel trading in Thailand was worth about 125 billion baht, but during 2017-18, the figure exceeded 20 billion baht per year thanks to robust growth in tourism," said Phattarachai Taweewong, associate director in research and communications at property consultant Colliers International Thailand.

Hotels located in prime areas of Bangkok, Phuket, Koh Samui, Pattaya and Chiang Mai are popular among locals and foreign investors.

Last year, only four hotels worth 5 billion baht were sold because of a shortage of attractive properties suitable for investment, Mr Phattarachai said.

Earlier this year, the pandemic caused the hotel occupancy rate to dip to 51.5% during the first quarter, falling to 20.8% in March, with the emergency decree having been announced on March 26.

Mr Phattarachai said the study showed the impact from the pandemic on the hospitality business worsening until June, with hotel operators losing more than 50% of bookings and revenue in the first half of 2020.

Thailand remains a preferred destination for global tourists, which should drive a strong rebound for the hospitality business when the pandemic is controlled, Mr Phattarachai said.

The expected rebound in tourism demand is prompting hotel investors to look into acquiring existing hotels in preparation for the return of travellers in the aftermath of outbreak, he said.

La-iad Bungsrithong, president of the northern chapter of the Thai Hotels Association (THA), said Chiang Mai has not seen many hotel sales, particularly among association members.

She doesn't dismiss the chance that small and medium-sized hotels, or those focused solely on a specific market such as China, could exit by selling their properties.

Mrs La-iad said that while the crisis may create opportunities to buy hotels at good prices, investors will have difficulty making a decision during a sluggish economy.

"During every challenging incident, there are always rumours that foreign investors will take over hotel businesses in Phuket, but I do not see such deals at this moment," said Kongsak Khoopongsakorn, president of the THA's southern chapter.

He estimated tourism would resume in October, but only at 30-40% of demand compared with the normal situation, which may be insufficient for hotels to make a profit.

This circumstance may trigger some hotels to sell their properties, Mr Kongsak said. Hotels with under 100 rooms or in inferior locations are most likely to announce sales.



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